Media C-Suite Week No. 46, Issue No. 32

12 November 2023 A Week in the Media C-Suite

A Week in the Media C-Suite

It’s Sunday, the 12th of November, 2023.

Today, as electric lights and candles appear around the world, as if from nowhere, we join billions of our fellow humans in celebrating Diwali, the “Festival of Lights”. This ancient Hindu celebration, symbolising the spiritual victory of light over darkness, good over evil and knowledge over ignorance, resonates profoundly within our Media & Entertainment industry. As storytellers, creators and visionaries we mirror these values in our works, striving to simultaneously enlighten, entertain, and inspire. Diwali’s message transcends cultural boundaries, or at least should, and reminds us that our collective creativity can be a beacon of hope and unity in a world demonstrably shrouded in divisiveness.

Diwali’s ethos of triumph and rejuvenation is a timely parallel for the recent developments within our ever-expanding sphere of influence.

Just Catching Up?

Doing so is a never-ending, universal imperative if ever there was one.

A Tentative Resolution

This week brings a long-awaited glimmer of optimism.

The standoff with the Studio’s union, AMPTP, has reached a resolution supported by the vast majority of SAG-AFTRA’s leadership, which now rests on decision by its member-actors.  The word, “tentative” has never been so heavy with meaning for an industry growing exhausted by the waiting.  Long held in suspense by this industrial action, the business of Media & Entertainment now has a path forward toward restarting the gears of production. It also acts as a reminder of how much Hollywood remains the beating heart of an increasingly globalised industry. This détente, though tentative, is a beacon of hope that signals the promise of momentum once again building in the distribution of mainstream film and television content.

In related news, Disney’s latest quarterly earnings report presents an insightful picture into why AMPTP may be settling. It has not been a bright couple of years for the leading Studio. With Disney’s stock price having suffered dramatically throughout the Hollywood strikes any analysis of the concessions made, to both writers and actors by the AMPTP, may offer a glimpse into corporate and commercial strategy being devised within the boardrooms of the studio giants.

It is evident that the strikes have had an impact.

The vast majority of Disney’s operating income over the past year has come from its theme parks and cruises business, increasing over 23% year on year. This compares to an increase in losses from Entertainment (led by its streaming businesses) of 32% year on year (in other words, 32% more in losses Y-on-Y). CEO Bob Iger predicts profitability from steaming to emerge by this time next year, but that may be wishful thinking as rolling out new entertainment content requires considerable lead time once the strike officially ends. Sports, however, has become a compelling segment for Disney with ESPN going digital (and less linear). It accounted for a 14% increase in revenues over the 4th quarter, with losses growing by (only) 9% year on year. 

In his statements, CEO Iger points to Disney’s legacy of “creative excellence” while de-emphasising its steaming operations and pointing in hope to “improving the output and economics of our film studios” (with a view toward creatives returning to work, no doubt). The only real enthusiasm seems to be for ESPN, which requires the least creative energy of all (from Disney anyway).

Let’s hope that an end to the strike action in Hollywood helps Iger claim some responsibility for its share price levelling off and (again, hopefully) rise again. You can read Disney’s official earnings release for A4 2023 here.

Creative Energy

Some may require a reminder that producers of commercial entertainment content exist for the all consuming purpose of making money.  For over a decade, the generation of money has been increasingly concentrated within those who distribute entertainment content, not those who create it. How to preserve that status quo for as long as possible has been the primary objective of AMPTP negotiators under the direct oversight of Disney’s Bob Iger and other Media Conglomerate CEOs.

What writers and actors now walk away with should be viewed from that lens. Only then can we forge a longer-term perspective on how to leverage this “tentative” victory for “the talent” into a longer-term partnership that restores the power and importance of the creatives who actually do produce what Disney, and its peers, sell.

For a deeper understanding of the situation, and its opportunities, we recommend reading our in-depth analysis on who Bob Iger answers to (hint, it’s not the audience).

Looking Forward?

It’s the only direction ahead of us.

How Not to Trip

The anticipated revival of Hollywood production heralds a season of renewal and opportunity. Investors, previously cautious amidst the uncertainties of the strikes, may now find renewed confidence in the sector.

Our sources tell us its long overdue and that investors are sitting on increasing levels of capital with a growing enthusiasm for Media & Entertainment. What they don’t have any enthusiasm for the status quo ante. They want to invest in tomorrow, not yesterday, and that means moving beyond the publicly-listed media conglomerates.

What we are hearing at the Media C-Suite is that professional investors want to own equity in the next generation of Media & Entertainment businesses. There is plenty of capital and far too few Media & Entertainment entrepreneurs actively pursuing it.

The coming months are likely to see a surge in exploratory meetings and a long-awaited opening of deal flow channels as investors awaken from this forced slumber.

To guide our readers through these evolving times, we’ve curated a selection of articles that delve into the nuances of investment in the Media & Entertainment sector:

As we step into a week imbued with the spirit of Diwali and the promise of a reinvigorated industry, let us embrace the opportunities to create, invest and inspire.

Here’s to a week of new beginnings and bright prospects as seen from your direct connections within the Media C-Suite.  Question?  You need only reach out and ask.

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